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Market Development Initiatives of ISSDA :

The Success Story of Stainless Steel Auto LPG Tank

(July 2002)

Ramesh R. Gopal
General Manager, Nickel Development Institute Secretary, Indian Stainless Steel Development Association


Introduction

The Indian Stainless Steel Development Association (ISSDA) was founded in 1989 by seven stainless steel producing companies with the explicit purpose of diversifying and increasing the use of stainless steel in India. This was at a time when the kitchen utensil segment may have accounted for over 90% of the end use for stainless steel in the country and most of it was being sold only in the urban areas.

The founding of ISSDA was a very essential for the industry to move forward and begin catching up with the rest of the world by introducing stainless steel into a whole new range of applications, hitherto found only in the developed countries of the west and in Japan.

With the help of the Nickel Development Institute (NiDI) and close cooperation with sister Stainless Steel Development Associations (SSDAs) in other countries, step by step, products and end-use sectors were identified which could have a potential in the country. Success always depended on adapting to the local culture, cost consciousness, availability of material and fabrication capabilities. Apart from this, the mindset that "stainless steel = utensils" and that "stainless steel is costly" had to be repeatedly demolished by creating awareness of the benefits of stainless steel and its attributes.

As a result of focused and persistent efforts aimed at material specifiers, engineers, architects and other decision-makers and also the fabricators over a period of time, ISSDA and its member companies have been able to introduce stainless steel into many new application areas.

In the transportation segment, stainless steel is introduced into railway passenger coaches, Metro coaches in Delhi, coal wagons; In the architecture, building, interior decoration and construction sector, stainless steel is now becoming the material of choice of architects and engineers. There are innumerable instances of airports, show rooms, office interiors, banks, shops, cafés and restaurants, fast food joints etc, sporting stainless steel cladding of columns and walls, hand rails, counter tops, furniture and many artifacts in their interiors and exteriors. Efforts are also on to introduce stainless steel reinforcement bars for concrete to give a long, corrosion free life to infrastructure coming up in the country. 20,000 square meters of railway platform roofing in stainless steel is under construction in Navi Mumbai.

Auto LPG Tanks
Way back in 1988 at the First Global Market Development Forum for Stainless Steel in London, an Australian company shared their experience of introducing stainless steel auto LPG tanks in place of corten steel in their country. Some time later, Salem Steel Plant (SAIL) approached the Bureau of Indian Standards (BIS) and set the ball rolling to have an Indian Standard for the product.

At the International Congress "Stainless Steel ’99" in Italy, the Spanish Stainless Steel Association – Cedinox shared its experience of introducing stainless steel for domestic LPG cylinders. This gave the impetus to redouble the efforts to introduce stainless steel for LPG tanks in India. Between the domestic and auto LPG cylinders, it was felt that introduction into the auto market would be quicker and easier because Australia had nearly 20 years of experience and a standard for stainless steel auto LPG tank was readily available.

Information provided by the Australians and the Spanish was published in ISSDA’s quarterly magazine ‘STAINLESS INDIA’ and widely circulated amongst cylinder manufacturers, oil companies, fabricators and stainless steel producers. The BIS was approached again with the support of Australian Standards for the auto LPG tanks. All major oil companies were contacted and a presentation was made to the oil industry committee about the benefits of stainless steel for this application.

In addition, the Australian firm manufacturing auto LPG tanks was contacted and invited to set up shop in India. This invitation was gladly accepted. All necessary help was given to them to find local partners, an idea of the market and its size etc. Simultaneously, the Spanish representatives were invited to India to make presentations to domestic LPG cylinder manufacturers and to oil companies and the BIS.

Mr Gerry de Comarmond, the Australian firm’s technical representative was invited to be present at the meeting of the BIS where the final draft of the Indian Standard IS:14899 was made. His presence and his vast experience with manufacture of stainless steel LPG cylinders and familiarity with the Australian Standards was extremely useful in quickly setting down the parameters of the Indian Standard. On July 27, 2000 stainless steel grade AISI 304L was approved as a candidate material in IS : 14899 by the Chief Controller of Explosives (CCOE), Nagpur, Government of India.

It took some time finding suitable partners, location and other related matters. Having tied up all the loose ends, the new company M/s Noveau Technologies Pvt Ltd was formed in Baroda. After setting up the plant and equipment, Noveau Technologies got their first approval for their design from the office of CCOE, Nagpur in January 2002.

The disturbances in Gujarat delayed matters. But finally inspectors from the BIS have ‘Type tested’ and passed the joint inspection for M/s Noveau Technologies. The "Red Form", the license to go into commercial production, is expected to be given to Noveau Technologies by BIS sometime in June for 45-litre and 60-litre capacities. Commercial production is also expected to start in June this year. Subsequently, BIS approval for the 70-litre version for bigger cars is expected.

In the next stage, 6.5-, 15- and 25- litre capacity tanks will be produced for three-wheelers and smaller cars. In addition, larger tanks for marine out board motors will be produced for boats and other sea-going crafts.

Noveau Technologies are in discussion with oil companies, passenger car manufacturers and manufacturers of valves so that all the essential elements of equipment, parts, installation as original equipment and gas distribution are seamlessly connected for providing quality service to the car owner.

Market size
Let us look at the market size. About 590,000 new cars rolled out in 2000 - 2001. Taking an average of about 10 kg per cylinder and a 5% market share of new cars alone, stainless steel use will be in the region of 3,000 tonnes per annum. Then there is the replacement market, whose size is difficult to estimate, but certainly huge.

LPG is a clean and attractive fuel
While LPG is known to be a much cleaner fuel compared to petrol, it also gives economic advantage to the user. According to a report from the government, the cost of running LPG passenger car (Maruti 800) will be Rs 1.21 per kilometer compared to Rs 1.60 per km for petrol. The running cost of LPG will be about 25% less than petrol. The cost of LPG considered in the calculations is the non-subsidized price at Rs 16.36 per litre; petrol’s price is taken at Rs 28.75 per litre for this comparison.

Why stainless
The LPG cylinder fitment in the boot of the car is similar to the CNG fitment — a fixed cylinder to be filled in at the gas station. In other words, the car owner owns it. Having bought a car for a few lakhs of rupees, if a customer has to pay additional say Rs 1,500 for a 60-litre stainless steel option, there is not going to be any price resistance. This will be a small percentage of the cost of the complete system, which may be in the range of about Rs 20,000.

What the customer gets in return for this extra investment is a nearly 50% reduction in the weight of the cylinder (for the same capacity in carbon steel). He also gets a bright and shiny interior needling very little maintenance apart from swipe with a piece of cloth. Even better is the durability — about 20 years. The car may not even last that long; he can get good end-of-life value for his stainless steel cylinder or fit it into his new car !

Conclusion

The infrastructure for retail filling of auto LPG cylinders is being put in place. Through farsighted planning by ISSDA and its member companies, and perseverance in the objective, stainless steel auto LPG cylinders are ready for the market just in time — ready to tap a new opportunity worth several thousand tonnes of stainless steel per annum. Efforts are also on to tackle the much larger domestic LPG cylinder market, which is desperately required for the armed forces, hilly areas and the premium sectors in urban areas.

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